-In the above figure, if aggregate demand does not change, the long-run equilibrium will be at the price level of ________ and real GDP of ________.
A) 100; $15.5 trillion
B) 120; $16 trillion
C) 100; $16 trillion
D) 110; $15.5 trillion

Question

-In the above figure, if aggregate demand does not change, the long-run equilibrium will be at the price level of ________ and real GDP of ________.
A) 100; $15.5 trillion 
B) 120; $16 trillion 
C) 100; $16 trillion 
D) 110; $15.5 trillion

Quizplus · Accepted Answer

In the long-run equilibrium, the economy will adjust to potential GDP, which is the level of output at full employment. Assuming aggregate demand remains constant, the price level will adjust to ensure that the quantity of aggregate demand equals the quantity of aggregate supply at the full employment level of output. Therefore, the correct answer is the one that matches the potential GDP (real GDP at full employment) without changing the aggregate demand.

-In the Above Figure, If Aggregate Demand Does Not Change